The EU’s eSAF mandate could affect ticket prices, route networks and Europe’s competitiveness, says SAS

A report by Scandinavian airline SAS warns that Europe is heading towards a structural shortage of eSAF (synthetic, or electro, aviation fuel) just as the EU’s regulatory mandate enters into force in 2030, which could cause a significant increase in operating costs for airlines and ticket prices for passengers. The report estimates the aviation sector in the three Scandinavian countries – Denmark, Norway and Sweden – will require 36,000 tons of eSAF in 2030, rising to more than 160,000 tons by 2035 and 330,000 tons by 2040 to meet the mandate. This corresponds to the output of one dedicated production plant by 2032, two to three plants by 2035, and around five by 2040. Today, points out SAS, none exist in Europe. Meanwhile, a study by Sweden’s Chalmers University of Technology finds the EU regulations could make eSAF production pathways more expensive and energy intensive than necessary.

The SAS Aviation Insights report says the potential for a structurally short market would move eSAF prices towards the cost of non-compliance under the ReFuelEU Aviation regulation, a level several times higher than today’s fossil jet fuel.

It says forecasting future eSAF market prices remains challenging as no commercial-scale eSAF is currently available and no European eSAF project has yet reached Final Investment Decision. However, it adds, in a short market – demand outstripping supply – there is a theoretical risk that eSAF prices could rise sharply – potentially tripling each year – until supply catches up. This could be mitigated by regulatory adjustments or a substantial share of eSAF being sold under long-term offtake agreements, acknowledges the report.

Meeting the eSAF blending mandate will require 552,000 tons of eSAF in the EU/EEA in 2030, implying that around eight new eSAF production facilities would need to be operational by that time to avoid a supply shortage, says the report. By 2035, the requirement would rise to more than 35 facilities.

The report estimates the future demand for eSAF in Scandinavia based on projected jet fuel uplift in the region over the coming years and assesses the potential cost implications for both airlines and per passenger.

As well as stimulating economic activity and creating high-quality jobs, the report says developing eSAF production in the region brings the aviation sector closer access to fuel supplies, lowering transport-related costs and emissions, and enhancing regional supply security.

“What we are seeing now [in the current fuel crisis] is a reminder of how exposed Europe remains to global fuel shocks,” commented Mads Brandstrup Nielsen, SVP Communication, Public Affairs & Sustainability at SAS. “If we fail to build domestic eSAF production, we risk creating a second vulnerability, this time inside a regulated system where demand is mandated but supply is not.

“This is a structural issue that will affect ticket prices, route networks and Europe’s competitiveness unless we act now.”

The report outlines two possible paths: either Europe scales back ReFuelEU ambition, so delaying the aviation sector’s net zero transition, or it accelerates production through targeted policy support, investment incentives and infrastructure development.

“Europe now has a very short window to decide whether it wants to lead or follow in the next phase of clean aviation,” said Brandstrup. “Without accelerated investment, we risk higher costs for passengers, weaker networks for businesses and a new strategic dependency that will be far harder to unwind later.”

Meanwhile, researchers at Chalmers University of Technology in Gothenburg believe EU rules on eSAF – a category classified as Renewable Fuels of Non-Biological Origin (RFNBOs) – production pathways are flawed and risk increasing both costs and energy use.

The research team studied the production of synthetic methanol, an example of a fuel molecule that can be converted into sustainable aviation fuel. It provided a representative case for analysing how different pathways affect resource use in the production of such fuel molecules. These energy-rich molecules can be produced by combining carbon atoms and hydrogen in chemical processes.

In the study, the researchers compared three different production pathways for methanol in which the carbon atoms come from biomass, so-called biogenic carbon. Two of the methods are based on biomass combustion, where CO2 is captured from flue gases and then mixed with hydrogen produced separately using electricity. The third is based on gasification, where heated biomass is converted directly into synthesis gas, which contains both carbon and hydrogen.

All three production pathways are technically feasible and both the raw material and final product can be the same but, according to the findings of the study, they differ in terms of energy use, cost and electricity demand.

“The gasification pathway proved to be the most resource-efficient option in our analysis, with up to 46% lower production cost and 30% lower electricity demand than the two combustion-based alternatives,” said Johanna Beiron, researcher in Physical Resource Theory at Chalmers and first author of the study.

Despite this, she said, combustion is favoured much more strongly than gasification under the EU regulatory framework. The RFNBO category, which is expected to expand from close to zero to 35% of all aviation fuel in the EU by 2050, includes all fuel from the combustion-based alternatives, but excludes around half of the fuel produced by gasification, said Beiron.

One purpose of the RFNBO classification is to stimulate increased generation of renewable electricity for the production of green hydrogen and to reduce dependence on biomass, which is a limited resource. However, says the study, instead of reducing the need for biomass, the EU regulations risk driving a less energy-efficient use of the limited resource.

“The regulatory framework does not account sufficiently for how efficiently different systems use energy and resources,” said Henrik Thunman,  professor of Energy Technology and Chalmers and co-author of the paper, which is published in the journal Fuel. “The study therefore highlights a structural issue in EU energy and industrial policy. Regulation risks working against its own objectives when definitions of sustainable fuels are not aligned with fundamental energy principles or with the Union’s broader ambitions for resource efficiency.”

The researchers hope their results will contribute to greater knowledge about the technologies and systems that are available.

“Our study shows that some parts of the regulatory framework probably need to be adjusted if the EU is to achieve its long-term goals,” said Thunman. “Better coordination is needed between climate targets, resource efficiency and industrial feasibility in order to address the uncertainty that currently exists. This uncertainty makes it difficult to make rational investment decisions for the large-scale expansion of sustainable aviation fuels in the coming years.”

Image: A render of Arcadia’s planned e-fuels facility in Vordingborg, Denmark, which is expected to produce around 100 million litres of eSAF per year

Christopher Surgenor
Editor